Viridian Therapeutics Inc

NASDAQ:VRDN

Earnings Call Transcript 2019-Q4

[Operator]

Greetings. Welcome to Miragen Therapeutics Fourth Quarter 2019 Earnings Call. [Operator Instructions] Note, this conference is being recorded. I will now turn the conference over to Dan Ferry with LifeSci Advisors. Thank you. You may begin.

[Daniel Ferry]

Thank you, operator. Good afternoon, everyone, and welcome to our fourth quarter and year-end 2019 conference call. Today, after the market closed, we issued a press release regarding our financial results and corporate updates for the fourth quarter and full year 2019. A replay of today's call will be available on the Investors section of our website approximately 1 hour after its completion. After our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to Miragen's President and Chief Executive Officer, Bill Marshall.

[William Marshall, executive]

Thank you, Dan. Good afternoon, everyone, and thank you for joining us for our corporate update call for the fourth quarter and full year 2019. I'm joined today by Diana Escolar, our Chief Medical Officer; and Jason Leverone, our Chief Financial Officer. Miragen was founded to discover and develop innovative RNA-based therapeutics and is dedicated to translating microRNA discoveries into breakthrough therapies that improve human health. Our extensive knowledge of microRNA biology and chemistry has enabled us to identify and develop microRNA targeted drugs that are designed to regulate gene pathways to return disease tissues to a healthy state. Over the past decade, we have developed a broad pipeline, including 3 clinical-stage product candidates, which we believe have the potential to benefit patients across a number of disease areas, such as blood cancer, pathologic fibrosis and tissue repair. We are encouraged by the promising safety and tolerability profile of our product candidates to date and excited by the preliminary efficacy we have observed for our microRNA targeting product candidates in human clinical testing. Over the years, we have both embraced and have been humbled by the challenges of developing a new class of therapeutics. In December of last year, we announced the implementation of a streamlined and more focused development strategy that we believe will allow us to deliver important milestones this year. While we see tremendous promise in many of our programs, we believe that narrowing our development pipeline in order to focus on these programs will help drive shareholder value. With that as a foundation, let me walk you through each program and provide an outlook for 2020 before handing the call over to Jason to provide a review of our financial results. Miragen's most advanced clinical asset is cobomarsen, which we believe has the potential to become a treatment option for patients suffering from microRNA-155 elevated hematological malignancies. As part of our streamlined corporate strategy, we introduced a revised development plan for cobomarsen in cutaneous T-cell lymphoma or CTCL, which includes delivering interim clinical data in 2020 from a modified SOLAR Phase II clinical trial. Under this modified trial design, we stopped the enrollment of new patients and will conduct an analysis of top line clinical response this year. This analysis will provide controlled data to assess the potential observed benefit of cobomarsen based on disease response in the skin in comparison to vorinostat. We have enrolled a total of 37 patients in the SOLAR study. These patients will continue to be evaluated for safety and clinical response in the coming months. We plan to assess the rate of an objective response in the skin that is durable for 4 months, defined as 50% or greater improvement in the severity of a patient's skin disease over the entire body or mSWAT. The decision to assess skin response as opposed to overall response was driven by the fact that patients allowed into the study only have skin disease and are verified not to have blood, nodal or visceral involvement at study entry. Improvements in skin disease are thus intended to reflect efficacy of the drug, whereas progression in skin disease reflect lack of efficacy. We've reserved the ability to obtain follow-up analysis for blood, nodal or visceral disease as we deem necessary, based on the results obtained using mSWAT. We believe that obtaining controlled clinical data from this cohort of patients may allow for a better assessment of the clinical potential of cobomarsen and provides important derisking for cobomarsen as a potential therapeutic in this indication. We intend for the controlled clinical data from the study to form the basis of determining what additional clinical investigation of cobomarsen in CTCL is warranted and what would be required to potentially obtain regulatory approval. Top line data from this Phase II trial of cobomarsen in CTCL is expected to be announced in the third quarter of 2020. As part of our broader strategy to assess the potential of cobomarsen to treat miR-155 elevated blood cancers, we are evaluating cobomarsen in a first-in-human Phase I expansion indication in patients with adult T-cell leukemia/lymphoma or ATLL. Earlier this year, we were pleased to announce positive data from this trial, specifically in a subset of ATLL patients with residual disease after chemotherapy or other treatments. The trial enrolled 15 patients with aggressive subtypes of ATLL, who were treated with cobomarsen by intravenous infusion. Of these 15 patients, we reported interim data for 9 patients, who are actively relapsing at the time of screening and 6 that had residual nodal or circulating leukemic disease after chemotherapy or other systemic therapies. We believe the data from the 6 patients with residual disease supports the continued development of cobomarsen in ATLL. For these 6 patients, the duration of cobomarsen treatment ranged from 4.5 to 23.7 months, with a median treatment time of 11 months. Median survival time of these patients was 26 months compared with 7.4 months median survival time from a large retrospective external historical cohort based on a meta-analysis of peer-reviewed literature, which included a series of studies with ATLL patients treated with standard of care over the past 10 years. These studies included more than 6,000 ATLL patients. In addition, we were also encouraged by the biomarker changes observed in the interim clinical trial data showing that disease stabilization is marked by a decrease in biomarkers of tumor cell activation and proliferation, providing evidence of the biological mechanism of cobomarsen on disease stabilization. We believe that the overall survival, biomarker and safety data we observed for cobomarsen provide a basis for its continued development in patients with aggressive ATLL. We believe that this is an area of unmet medical need, considering that these patients have historically had a very poor prognosis. Based on these data, we have focused our cobomarsen expansion indication efforts on ATLL and expect to meet with the FDA in the third quarter of 2020 to explore a potential expedited development path for cobomarsen in ATLL. Turning now to our fibrosis programs that are centered on the replacement of microRNA-29, which is found at abnormally low levels in a number of pathologic fibrotic conditions. MicroRNA-29 is believed to play an important role in the regulation of certain processes that contribute to fibrosis. We believe that increasing the levels of microRNA-29 by administration of our proprietary microRNA mimics could provide benefit to patients with excessive fibrous connective tissue deposition, which has become extreme or pathological in an organ or tissue. We are currently developing 2 distinct microRNA-29 mimics, remlarsen and MRG-229, for the treatment of various forms of pathological fibrosis. In the fourth quarter of 2019, we reported interim data from a Phase II trial assessing the safety, tolerability and preliminary clinical response for remlarsen, in patients with a history of keloid scars, a form of pathological scarring. These data suggest that remlarsen was generally safe and well tolerated, treatment had no negative effect on healing reported and initial volume reductions in treated cheloids compared to placebo in a subset of patients were observed. We will continue our analysis of patient data at the 1-year primary endpoint of the clinical trial and intend to report final observations from the study in the second half of this year. Remlarsen has also been shown to reduce scarring and hazing after a corneal injury in preclinical studies and has further been observed to regulate miR-29 pharmacodynamic and mechanistic biomarkers in the cornea and retina. We believe that this data expands the potential application of remlarsen to a variety of ocular fibrotic conditions. Consistent with our revised strategy, we may seek a collaboration partner interested in the future development of remlarsen for the potential treatment of cutaneous and/or ocular fibrosis. As we announced in December of last year, we plan to focus our preclinical pipeline development efforts, primarily on the development of MRG-229 for the treatment of patients with idiopathic pulmonary fibrosis or IPF. In 2019, we reported data in which systemic administration of MRG-229 appeared to efficiently reduce extracellular matrix deposition in a series of preclinical studies. We believe that this data, coupled with the previous observations in humans with IPF, support the role of microRNA-29 in pathologic fibrosis in the lung. We believe that the potential efficacy and safety profile of MRG-229 positions it as a potentially differentiated approach in IPF. Looking ahead, we plan to report additional preclinical safety and efficacy data during the second quarter of 2020. As a reminder, the development of MRG-229 for IPF is supported in part by a grant in collaboration with the National Institutes of Health and Yale University. We are grateful for their support of this important program. With regard to MRG-110. During fourth quarter of 2019, we announced data from two Phase I clinical trials in normal human volunteers, in which administration of MRG-110 was observed to increase angiogenesis as demonstrated by increased perfusion and histological markers of neoangiogenesis as well as reduced alpha-smooth muscle actin expression which has been shown to correlate with activation of myofibroblast. A total of 65 subjects were exposed for up to 3 weeks in these studies and MRG-110 was shown to be generally safe and well tolerated with no evidence of unwanted distal angiogenesis, acute inflammatory toxicities or significant abnormalities in the liver, kidney or blood and no injection site reaction. We believe that MRG-110 may have the potential to be used for the treatment of heart failure and other conditions where patients may benefit from increased vascular flow and accelerated healing, such as in patients with high risk of poor wound closure. While we've not announced future development plans for MRG-110, we may seek a new development collaboration for this product candidate in the future. Before I turn the call over to Jason, I want to say that I'm very proud of the work that everyone on the Miragen team, including our employees, advisers, consultants, service providers and vendors have put into developing a pipeline of clinical-stage, microRNA-targeted product candidates, which we have observed to be generally safe and well tolerated with proof of mechanism data in humans and in some cases, preliminary clinical proof of concept. We continue to believe that this generates Miragen's technology and demonstrates the capabilities of our team to develop microRNA-targeted product candidates. With that, I will now turn the call over to our Chief Financial Officer, Jason Leverone.

[Jason Leverone, executive]

Thank you, Bill, and good afternoon, everyone. In today's press release, we reported our fourth quarter and full year 2019 financial results. Please note that these results are unaudited as of this call, and we plan to file our audited financial statements with our 10-K later this week. We ended 2019 with $26.8 million in cash, cash equivalents and short-term investments. This compares to $62.5 million at the end of 2018. Net cash used in operating activities was $7.8 million for the fourth quarter of 2019 and $36.1 million for the full year 2019. Based on our cash, cash equivalents and short-term investments as of December 31, 2019, and after giving effect to the additional proceeds we received after year-end through today, we believe that our current cash, cash equivalents and short-term investments. Will be sufficient to fund our operations into the third quarter of 2021. Moving to operating results. Today, we reported revenue of $0.9 million for the fourth quarter 2019 compared to $0.5 million in Q4 2018. And for full year, revenue was $4.5 million compared to $8.4 million in 2018. The decrease in revenue for the full year 2019 was primarily due to a $3.7 million development milestone payment we earned under our prior collaboration agreement in 2018. Research and development expenses were $8.4 million for the fourth quarter of 2019 compared to $8.2 million in Q4 2018. And for the full year, R&D expenses were $34.8 million compared to $30.4 million for the full year 2018. The increase in R&D expenses for the full year 2019 was primarily due to increased clinical development activities associated with the Phase II SOLAR clinical trial of cobomarsen and increased personnel-related costs, including restructuring charges. These changes were partially offset by decreases in technical efficiencies and other miscellaneous expenses in 2019. General and administrative expenses were $2.5 million for the fourth quarter of 2019 compared to $2.7 million for Q4 2018. And for the full year, G&A expenses were $11.6 million compared to $11 million for the full year 2018. The increase in G&A expenses for the full year 2019 was mainly due to increases in personnel-related costs, including restructuring costs and increased legal expenses. Recall that in 2019, we began implementing 2 phases of a cost restructuring plan to streamline our operations, reduce cost and focus our development efforts. As a result of this cost restructuring program, we recorded $2 million of restructuring charges during 2019, of which $1.7 million was recorded to R&D expenses and $0.3 million was recorded to G&A expenses. We expect to incur an additional $0.2 million of restructuring costs related to this plan in the first half of 2020. Finally, our net loss for the fourth quarter of 2019 was $10.1 million or $0.31 per share. This compared to $10.3 million or $0.33 per share for the fourth quarter of 2018. And for the full year 2019, our net loss was $41.9 million or $1.34 per share. This compared to $32.7 million or $1.10 per share for 2018. That concludes our prepared remarks today. With that, I'll ask the operator to open the call for questions.

[Operator]

[Operator Instructions] Our first question is from Kambiz Yazdi with Wedbush Securities.

[Kambiz Yazdi, analyst]

This is Kambiz on for Liana. For cobomarsen ATLL discussions with the FDA, what would be the potential best case for an expedited development path in your view? And then as a second question, how will R&D expense compare in 2020 to 2019?

[William Marshall, executive]

Kambiz, thanks for the question. Let me touch on the first aspect, I'll let Jason address the second aspect. Really our goal and what we've been working hard at is really developing that kind of historical control proposal. And this is really what's been impressive to us or, should I say, depressing is that despite 10 years of sort of developing different therapies against patients with ATLL, what one finds in these highly aggressive forms is a very consistent core survival for these patients of about 7.5 months. And it's very closely tied. There isn't a lot of variation in it. What we observed in the studies, and what we've reported to date, is that in the patients that we've looked at, we've got a set of patients, they've got kind of baseline prognostic indicators that are consistent with poor outcomes in the disease. And we've seen a pretty impressive improvement in overall survival, progression-free survival. And importantly, biomarkers associated with the reduction in the poor prognostic biomarkers. In addition, the compound remains, cobomarsen remains to have a very nice safety and tolerability profile. So really, the -- what we're building is then the case to discuss with the FDA. We hope to then gain guidance on the likely size the logistics around conducting the trial and the likely time necessary to move towards something that would allow us to move to accelerated approval. Again, that will be driven based on discussions with the FDA, and it's difficult for us to anticipate the outcomes, but we're hopeful, given the rarity of this disorder. It's poor prognosis and the lack of really any meaningful therapies in this area. And also, cobomarsen's rather nice safety and tolerability profile that they would be interested in helping us move this in an accelerated manner towards availability for patients in need. And Jason, I'll let you address.

[Jason Leverone, executive]

Sure. Thanks. So in terms of R&D expenses, we did see a year-over-year increase in R&D expenses. But if you look at this fourth quarter, we had a decrease. We reported $8.4 million R&D expenses in the fourth quarter, which was down from $9 million in the third quarter of 2019. And really under our average for the year, which was roughly $8.7 million. So going forward, I continue to expect R&D expenses to decrease on a quarterly basis from the base of 8.4% in this quarter as we proceed with SOLAR and report data in the third quarter. And also, as a result of the restructuring we announced in December.

[Operator]

Our next question is from Jon Miller with Evercore ISI.

[Jonathan Miller, analyst]

I guess we got updated cash guidance today, you say you had a runway through 3Q '21. I guess, I wanted to get a sense of exactly what that covers. Obviously, we've got SOLAR reading out this year. We've got some more data from ongoing trials. But when you talk about runway through 3Q '21, are there new trials included in that runway? And what additional catalyst that you can get through with that? And then just to follow up on that meeting with the FDA. I seem to recall the last guidance was that you could have that meeting in 2Q, and now you're guiding to it in 3Q this year. So was there a delay in your ability to get in with the FDA to discuss that accelerated path of ATLL? And then just one last one, MRG-229, which is going to get additional preclinical updates 2Q this year, I guess, what is the timing into the clinic there? And when could we start to see an IND and getting updates in people with that new focus program?

[William Marshall, executive]

Thanks, Jon. Great questions, as usual. So the guidance in terms of the cash runway really takes into account our ability to continue to execute, deliver the top line data in the CTCL study continue to conduct the work necessary to prepare for and conduct the meeting with the FDA moving forward as well as sort of supportive general and administrative expenses to generally support the company. So that's the focus. It doesn't include additional clinical work that would be something that we'd be looking for additional financing to add to. In terms of the meeting with the FDA, but we sort of altered our guidance really on when we anticipated to hear back from the FDA. So we have been working hard. I think one of the more important things and one of the things that gave a meaningful comparator for the results we've seen so far in ATLL has been the meta-analysis that we've done in developing a real-world database. We are working very stringently on developing our strategy and our discussions with the agency, and we remain on track to delivering in the results of those discussions in the third quarter. So it may have just been when we anticipated having the meeting versus when we anticipated hearing more about the outcomes of that meeting. No significant delays other than just being rigorous in the way we're putting the package together. And then on the MRG-229 front, we have, as we reported, this is a next-generation microRNA-29 mimic. It's more highly chemically stabilized. It's got a targeting ligand on it. We've seen some very encouraging, highly reproducible results in reducing fibrosis, whether that's the biomarkers or the actual histological readouts in things like bleomycin. But more importantly, and more of what we've been focused on recently is really those studies in precision-cut human lung slices. So we're doing additional work in that setting, the meaningful kind of preclinical systems, particularly precision-cut human lung slices. We're doing a lot of pharmacokinetic, pharmacodynamic analysis, understanding dosing or understanding longevity. We want to really look at the safety profile of the compound. And this has all been done in a sort of an exploratory setting, setting the stage for moving towards the IND-enabling studies. So I would just kind of defer, I guess, on giving you some real guidance on when we would anticipate hitting clinic until the point where we've got a better feeling of what were the most recent observations, and we report that as well as the likely studies that we'll need to do prior to first dosing in humans, and we'll obviously be updating our guidance on that regularly.

[Operator]

[Operator Instructions] Our next question is from Madhu Kumar with Robert W. Baird.

[Jennifer Teubl, analyst]

This is Jennifer on for Madhu. Just a few questions for us. Could you maybe elaborate on the parameters for the cobomarsen CTCL analysis and what might define sort of a go, no-go decision on that? And then I have a follow-up question on the cash run rate, but I'll wait on that one.

[William Marshall, executive]

Okay. And I'll let Jason handle the second question. Thanks, Jennifer, for the question. What we're going to be looking at, we basically have converted the analysis at the -- from a futility analysis to an interim analysis. So we're going to be looking at top line data, it was really an interim look at efficacy rather than whether or not the study should simply continue based on a lack of utility. So with that in hand, we're going to be looking at the objective response rate with 4 months of durability in the skin. If you remember, we -- in the Phase I studies, we had really looked at a variety of different parameters. We looked at different doses, different routes of administration. But what we had settled in on was what we carried forward into SOLAR. So at the 300-milligram IV infusion dose, what we saw was, in the neighborhood of a 50% objective response rate with 4 months of durability in the skin in that first study with a smaller number of patients. And the comparator used in the study is vorinostat. Vorinostat is an approved agent in the area, that we do have a pretty good field for what the potential performance would be, based on a study in which it was used as a comparator a couple of years ago. And if vorinostat based -- I mean, if cobomarsen hits in the neighborhood of what we saw in Phase I study and vorinostat performs as it had, we would then have a result that could provide statistical significance. It would then guide on what sort of additional number of patients that we need. We still think if we would think about the original number of patients in the SOLAR trial, we would lose some powering, but it would still position us well. And really, the -- it's going to be data-driven. As you know, the performance of other agents in this area is less than stellar. Some of the more commonly used drugs in this class of patients, the 1B through 3, is in the neighborhood, anywhere from sort of 5% up to something around 16%. And so we believe that there's an opportunity for an agent that would have performance similar to what we saw in Phase I with cobomarsen to provide a meaningful benefit in this area that we think has high unmet need but as I said, will be data-driven and really focused on making some crisp decisions on future development path.

[Jennifer Teubl, analyst]

That's really helpful. And then I just wanted to clarify further the cash runway that you just spoke about. Does that assume a new trial start for ATLL? And does it also include a possible restart for recruitment in SOLAR?

[Jason Leverone, executive]

Thanks, Jennifer. So the cash runway that we put forward does not yet incorporate capital allocation to additional trials in cobomarsen in terms of either a restart of the SOLAR trial, as you pointed out, or the next study from ATLL. I think we're really looking forward to discussions with FDA later this year to really help support, validate and sort of define the next steps for that program as well as the data we're going to report in the third quarter for cobomarsen in CTCL.

[Operator]

We have reached the end of our question-and-answer session. I will now turn the call over to Bill Marshall for closing remarks.

[William Marshall, executive]

Great. We want to thank everyone for taking the time this afternoon and for your support as we work to bring life-changing medicines to patients in need. We hope you have a great afternoon. Bye-bye.

[Operator]

Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.